Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

16 Money, Bank Credit, and Economic Cyclesirregular-deposit contract, interest agreements are contra naturamand absurd. Coppa-Zuccari, with his customary insight,explains that the absolute impossibility of including an interestagreement in the irregular deposit contract is, from a legalviewpoint, a direct result of the right granted the depositor towithdraw the deposit at any time, and the depositary’s correspondingobligation to maintain the associated tantundem constantlyavailable to the depositor. 15 Ludwig von Mises alsoindicates that it is possible for the depositor to make depositswithout demanding any type of interest precisely becausethe claim obtained in exchange for the sum of money isequally valuable to him whether he converts it sooner orlater, or even not at all; and because of this it is possible forhim, without damaging his economic interests, to acquiresuch claims in return for the surrender of money withoutdemanding compensation for any difference in value arisingfrom the difference in time between payment and repayment,such, of course, as does not in fact exist. 16Given the economic foundation of the monetary irregulardepositcontract, which does not imply the exchange of presentgoods for future goods, the uninterrupted availability infavor of the depositor and the incompatibility with an interestagreement arise logically and directly from the legal essence15 Conseguenza immediata del diritto concesso al deponente diritirare in ogni tempo il deposito e del correlativo obbligo deldepositario di renderlo alla prima richiesta e di tenere semprea disposizione del deponente il suo tantundem nel depositoirregolare, è l’impossibilità assoluta per il depositario di corrispondereinteressi al deponente. (Coppa-Zuccari, Il depositoirregolare, p. 292)Coppa-Zuccari also points out that this incompatibility between theirregular deposit and the payment of interest does not apply, as is logical,to the completely separate case where interest is awarded becausethe depositary fails to return the money upon request, thus becoming adefaulter. As a result, the concept of depositum confessatum was, as weshall see, systematically used throughout the Middle Ages as a legal ployto bypass the canonical prohibition on the charging of interest on loans.16 Mises, The Theory of Money and Credit, p. 301.